Checked back for your other question on this tree as well - follow Seaburngirl's advice for the scale infestation on the bark. As for these caterpillars, its hard to know quite what they are, could be Figure of Eight caterpillars, or Alder caterpillar, not close enough to see detail, and anyway, caterpillars change their appearance every time they moult if they're butterflies, but whatever they are, I'd just pick them off and destroy, wearing a rubber glove or similar - but only if they're decimating the tree by eating all the leaves. A few here and there being eaten isn't a big deal, and my feeling about caterpillars is, if they're not destroying something, let 'em be.